In the best year for the freight transportation industry since the Great Recession, logistics managers chalk up efficiencies that drive further U.S. economic growth. However, capacity issues persist, causing shippers to worry about rate hikes as carriers continue to be meticulous in their partnerships.

Does your organization struggle with the integration of information between your internal systems, processes and partner portals? You're not alone! Kapow Software alongside EFT has surveyed over 200 organizations regarding the importance of information access, visibility and discusses some of the major goals for supply chain and logistics organizations.

During this webcast we'll explore how supply chain execution convergence (SCEC) helps break down the barriers resulting from disparate, fragmented technology solutions allowing you to more effectively serve customers, adapt to changing business cycles, and save both money and resources.

December spot market availability saw a 10 percent gain over November and a 45 percent annual hike, according to data recently released by DAT, a subsidiary of Portland, Oregon-based TransCore, in its DAT North American Freight Index.

Company officials said this impressive gain was the result of atypical season patterns, noting that freight levels usually peak in the second quarter and subsequently tail off the rest of the year, whereas in 2013 the market stayed firm throughout the year.

What’s more, the index found that the impressive annual gain in December represented a sixth consecutive record for same-month freight volume, adding that December is the highest level for the month going back to 1996, when the index was established.

Looking at December load availability volumes, DAT observed that they increased: 19 percent for vans, 14 percent for refrigerated trailers, and 1.0 percent for flatbeds on a sequential basis, and they each headed up 41 percent, 65 percent, and 43 percent, respectively, annually.

And in the spot market rates for vans were up 5.0 percent for a monthly average of $1.95 per mile, which DAT said is the highest rate since it first started publishing these rates in 1999, with refrigerated and flatbed rates moving up 3.2 percent and 3.8 percent, respectively, sequentially. Annually, spot market rates were up 15 percent for vans, 6.7 percent for refrigerated, and 7.8 percent for flatbeds, said DAT.

David Schrader, senior vice president of DAT’s freight matching business, told LM that part of the reason for the increase in December spot market activity is related to how the holiday season was laid out, as there was one less week between Thanksgiving and Christmas, coupled with severe weather conditions in many parts of the country.

“It is not just about the holidays and weather, though,” he said, “we have seen abnormally strong freight volumes through the second half in total, which is not something we typically see. Some drivers for this have been energy and fracking, and increased automotive activity. There are a number of different sectors that have contributed, which makes it pretty broad-based in general.”

On a year-to-date basis in 2014, Schrader said that the momentum from 2013 has continued into this year, explaining that much of what occurs in the spot market is based on carrier behavior.

He explained this is comprised of ebbs and flows as freight gets tight carriers increasingly are searching for loads and posting their equipment. Conversely, when capacity is tight, brokers and shippers tend to do a lot of posting and searching, with carriers tending not to post their capacity and instead search in a similar manner.

“We are seeing a lot more of that behavior, where carriers are just not actively posting their capacity and are definitely as a result seeing some capacity tightening going on in the market, which is helping to drive spot market rate growth,” he said.

Regarding the motor carrier Hours-of-Service rule changes that took effect last July, Schrader said that the impact on available capacity of about 3-to-5 percent is not as bad as once was thought but noted there is still some effect there, explaining that anything that has the effect of limiting capacity-or make capacity less efficient– is going to drive up spot market rates.

Robert W. Baird & Co. analyst Ben Hartford wrote in a research note that the increased spot market activity in November and January saw demand for spot truckload capacity head up, due to weather-related disruptions, seasonal demand improvement, and ongoing driver regulatory constraints, adding that “Emerging volatility could support reaccelerating industry rate growth in 2014.”

About the Author

Jeff BermanGroup News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. .(JavaScript must be enabled to view this email address).

Subscribe to Logistics Management magazine

Subscribe today. It's FREE!

Get timely insider information that you can use to better manage yourentire logistics operation.

Recent Entries

While many industry analysts contend that distribution centers near U.S. East Coast ports will see a surge of new business after the Panama Canal expansion, real estate experts say this phenomena is already underway.

A new Government Accountability Office report on the effects of changes to truck driver hours of service rules has sparked a war of words between the American Trucking Associations and Federal Motor Carrier Safety Administration, the arm of the Transportation Department that is in charge of making those rules.

The Department of Transportation’s Bureau of Transportation Statistics (BTS) reported this week that U.S. trade with its North America Free Trade Agreement partners Canada and Mexico in May dropped 10.8 percent annually to $92.7 billion, following a 6.8 percent annual decline to $93.3 billion in April.

Rumors of transportation and logistics titan UPS acquiring Chicago-based transportation management services provider Coyote Logistics for $1.8 billion have become a reality, with UPS announcing today that the deal is now official.